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Schiff, Maurice
Year of Publication: 
Series/Report no.: 
IZA Discussion Papers 9542
Is ability drain (AD) economically significant? That immigrants or their children founded over 40% of the Fortune 500 US companies suggests it is. Moreover, brain drain (BD) induces a brain gain (BG). This cannot occur with ability. Nonetheless, while BD has been studied extensively, AD drain has not. I examine migration's impact on ability (a), education (h), and productive human capital or 'skill' (s) – which includes both a and h – for source country residents and migrants, under the points system (PS), 'vetting' system (VS), which accounts for s (e.g., US H1-B visa), and 'new' points system (NS), which combines PS and VS (e.g., Canada, 2015+). I find that i) Migration reduces (raises) source country residents' (migrants') average ability and has an ambiguous (positive) impact on their average education and skill, with a net skill drain more likely than a net BD; ii) AD is greater than BD; iii) the effects increase with ability's inequality or variance V(a); iv) the policies in turn raise V(a), V(h) and V(s), with V(a) > V(h); v) effects in i) - iv) are larger under VS than PS; vi) residents' (migrants') consumption is lower (higher) under either policy than under a closed economy; vii) consumption falls with ability's inequality; viii) contrary to the situation with education and skill, consumption inequality is lower under VS than PS; viii) ability, education and skill (consumption) under NS are identical (is larger than) the combined values under PS and VS. Orders of magnitude, empirical research plans, and policy implications are provided.
points system
vetting system
ability drain
brain drain
brain gain
Document Type: 
Working Paper

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